Definition of contingent asset

This is an asset that a party may receive subject to a future event. These are popular among companies seeking to provide security to their pension schemes. The company might hold some money in an escrow account that pays to the pension scheme if its funding level dips below an agreed point. But these assets do not have to be cash.

ExampleSpecial purpose vehicles are often set up to hold assets ranging from property to whisky as security against the employer’s pension promises. Contingent assets can reduce the annual levy that pension schemes have to pay towards the Pension Protection Fund as they are seen to reduce funding risk to members’ benefits. [1]